The E.W. Scripps Company (SSP) Earnings

Management highlights

- Regulatory Update * Management welcomed the FCC's vote to lift the broadcast ownership cap, noting it levels the playing field for broadcast companies relative to large tech and streaming platforms, and supports future M&A opportunities and Scripps' ongoing transformation. - Sports Strategy Progress * Scripps Sports signed its first NBA partnership (Detroit Pistons) and added a fifth NHL partner (Nashville Predators) in Q2, plus secured the U.S. broadcast rights for the 2027 Women's Volleyball World Cup on ION. * Converting 5 ION stations to carry local sports creates low-capital local duopolies, unlocking new core and distribution revenue. ION is positioned as the leading linear home for national women's sports, which drove stronger advertiser demand during the 2026 summer national upfront. Sports has become a key driver of premium advertising rates and audience growth. - M&A and Portfolio Optimization * Completed an accretive acquisition of a second Big Four affiliate to create a duopoly in Lexington, Kentucky, and a station swap with Gray Media across five markets that expanded Scripps' presence in the Mountain West. Closed sales of stations in Fort Myers and Indianapolis in spring 2026, with proceeds used for debt paydown. * Station M&A will remain a key tool to optimize the portfolio and create high-margin duopolies post-regulatory change. - Distribution Negotiations * Completed renewal of all three major 2026 distribution agreements covering 70% of paid TV subscribers, ending temporary blackouts with Comcast and DirecTV. The new agreements deliver fair value for Scripps' programming and support future margin expansion, with no major affiliation agreement expirations coming in the near term, providing clear expense visibility. - Political Advertising * Q2 political revenue set a company record, and full-year 2026 political revenue is projected to hit a new midterm record of $225-$250 million, up from $198 million in 2022. The recent Supreme Court ruling on coordinated party/candidate spending is expected to add upside to political ad volume, with strong spending already observed in key battleground markets. - Company Transformation and Operational Restructuring * The transformation plan combines expense reduction and revenue growth, targeting $125-$150 million in incremental enterprise EBITDA by 2028. Year-to-date, 432 employee positions and 126 open roles (12% of total workforce) have been eliminated, with additional cost cuts planned for coming quarters. Total cash restructuring costs are still projected to hit $40-$50 million, in line with prior guidance. * Local news is being reorganized around AI automation, centralized back-office roles, and 24/7 multi-platform distribution, while maintaining commitment to high-quality local reporting. The Scripps Networks business has been merged under unified leadership with local media to drive cross-portfolio optimization of spectrum and assets.

Guidance

- Full-year 2026 political advertising revenue is guided to a range of $225 to $250 million, an increase from 2022's $198 million. Full-year gross distribution revenue is expected to decline low single-digits YoY, while net distribution revenue is projected to grow mid to high single-digits YoY. Capital expenditure is guided to a range of $50 to $60 million, with a projected net tax refund of approximately $5 million. - The company now expects to reach $100 million in annual run rate cost savings from the transformation plan by the end of 2026, a 33% upward revision from prior first-quarter guidance. The long-term target of $125 to $150 million in incremental enterprise EBITDA by 2028 remains unchanged. - Q3 2026: Local Media division revenue is expected to be up ~20% YoY, with core advertising down low double-digits (in line with 2022 midterm trends), and division expenses down low single-digits YoY. Scripps Networks revenue is expected to decline mid-teens YoY, with expenses up low single-digits YoY. The "Other" segment corporate/shared expense line is projected to be ~$25 million. - Q4 2026: Excluding new sports-related costs, Local Media expenses are expected to decline mid to high single-digits YoY. Scripps Networks expenses are expected to decline low to mid single-digits YoY, as transformation savings take full effect. - Management reaffirms the long-term target for Scripps Networks to return to ~30% segment margin, after expanding margins by over 600 basis points in 2025.

Segment performance

1. Local Media Division: Q2 2026 adjusted revenue was $317 million, a 1% year-over-year (YoY) decline. Core advertising fell 4.8% due to economic uncertainty, political crowd out, and carriage dispute impacts. Political advertising revenue hit a Q2 record of $28 million. Distribution revenue declined 13% YoY to $161 million, driven by blackouts during carriage negotiations. Division expenses were down 3% YoY, and segment profit was $56 million. This segment contributes 64.8% of total company segment revenue. 2. Scripps Networks Division: Q2 2026 adjusted revenue was $172 million, a 13% YoY decline, driven by linear viewing trends, Nielsen measurement methodology changes, and a softer direct response advertising market. Connected TV (CTV) revenue grew 28% YoY. Division expenses increased 3.7% YoY to $146 million, and segment profit was $26 million (down from $57 million in Q2 2025). This segment contributes 35.2% of total company segment revenue. 3. Other Segment: The segment reported a Q2 2026 loss of $4.5 million. Shared services and corporate expenses totaled $27.5 million, due to higher medical claims and increased insurance premiums.

Risks & headwinds

- Macroeconomic uncertainty has weakened core advertising demand, particularly for direct response advertising on Scripps Networks, which is highly sensitive to consumer sentiment affected by inflation and high interest rates. - Sudden, unanticipated changes to Nielsen's audience measurement methodology have negatively impacted Scripps Networks revenue, accounting for roughly 50% of the segment's Q2 2026 revenue decline. While Nielsen has committed to correcting the issue in fall 2026, management has not baked any upside from this fix into current guidance due to uncertainty around the implementation timeline and final outcome. - Temporary carriage blackouts with major MVPDs (Comcast, DirecTV) reduced Q2 2026 distribution and core advertising revenue, though disputes have been resolved. - Long-term secular headwinds from linear TV viewing declines and cord-cutting continue to pressure traditional network revenue. - The lifted broadcast ownership cap is currently facing legal uncertainty, which may impact the timing and scope of future M&A activity. - Transformation-related restructuring requires difficult workforce reductions that carry operational and cultural risks, even as it is deemed financially necessary.

Analyst Q&A

• Q: What is the status of Nielsen's planned methodology corrections, and what impact could they have on Scripps' results? /

  A: Management confirmed that 50% of Scripps Networks' Q2 revenue softness stems from the sudden February 2026 Nielsen methodology change, which underrepresented broadcast and multicultural audiences. Nielsen has committed to implementing corrections in September 2026 that are expected to benefit both Scripps Networks and local media. No upside from the fix is baked into current guidance, as management takes a cautious approach until changes go live. The change will also switch local measurement to credit for cumulative minute viewing, which better aligns with modern viewing habits and should improve local audience metrics.

• Q: What is the controlling Scripps family's current stance on a potential sale of the company, after prior rejected bids? /

  A: Management noted that the controlling family has always prioritized actions that deliver maximum value to all shareholders, and this approach will not change. Management believes that continuing to transform the business, optimize the portfolio via strategic swaps, divestitures and acquisitions, and leverage the new regulatory environment will create the most value for stakeholders long-term, and is focused on executing this plan.

• Q: What is the expected cash cost to hit the accelerated $100 million year-end 2026 run rate savings target, and is the total projected cost higher than before? /

  A: Management confirmed the total projected cash restructuring cost for the full transformation plan remains $40-$50 million, unchanged from prior guidance. The accelerated timeline for hitting $100 million in run rate savings only pulls forward achievement, it does not increase total projected costs. Of the $36 million in Q2 2026 restructuring charges, only ~$12 million was cash, ~$9 million is accrued for future payment, and the remainder is non-cash.

• Q: How does Scripps view its large broadcast spectrum holdings, and what is the plan to unlock value from this asset? /

  A: Management describes Scripps' large spectrum portfolio (acquired in the ION purchase) as an undervalued goldmine that is not reflected in the current share price. Scripps is already unlocking value by converting underutilized ION stations into local sports duopolies that generate high incremental margins. Management is open to all future opportunities, including participation in a potential 2028 incentive auction if it occurs, and will always pursue the best and highest use of the spectrum to benefit shareholders.